Determining the most important indicators affecting the failure risk of conventional and sharia rural banks

This study identifies key variables influencing the risk of failure in Indonesia's Conventional and Sharia Rural Banks (BPR and BPRS) and proposes strategies to mitigate these risks. Using the Analytical Network Process (ANP) method, the study engaged 11 respondents, including banking practitioners from Conventional and Islamic Commercial Banks, Rural Banks, Islamic Rural Banks, and academics. Data were analyzed with Super Decision software and Excel. Results reveal four critical variables: 1) macroeconomic, 2) microprudential, 3) macroprudential, and 4) bank internal variables. The welfare aspect of macroeconomic variables emerged as the most significant, followed by the liquidity indicator in microprudential variables and the internal resilience indicator in macroprudential variables. These findings guide strategies to enhance banking performance and reduce failure risks. Regulators and the government should prioritize macroeconomic welfare indicators to strengthen the banking system and address factors contributing to BPR and BPRS failures.